OK, so some situations won't ever exist outside of the
tabloid realm. But in the material world, a number of entrepreneurs
have had more than their share of all-too-real nightmares to deal
with. Here, three entrepreneurs tell their tales of woe...and how
they survived after their worst nightmares came true.

I Got Bugged By The Media!

Ironically, Annabelle Candy Co.'s darkest hour came just
before Halloween, 1996, in a nightmare that cost the San Francisco
Bay-area company nearly $2 million.

Although pest control is an issue for all candymakers, the pests
in this case included the camera-bearing, microphone-toting
variety--right before the company's biggest selling season of
the year.

It all started when a woman bit into Annabelle's Rocky Road
brand candy bar and encountered an unexpected ingredient: a
wriggling meal moth. "Instead of calling us, she called [a
local TV station], and they just went nuts," says Susan Gamson
Karl, 44, co-owner, president and CEO of Annabelle. When a reporter
asking if the company planned to recall the product caught Karl
offguard--and unaware a problem existed--she answered, "Well,
I have to look into it further."

The evening news that night led with a skewed picture of the
small family-run company's goodwill. And to top it all off,
making its TV debut in living color, was the meal moth in its
chocolatey peanut home. The news then went out on the AP wire, and
the damage was done. "It was a siege," says Karl.
"We had the media in our parking lot for a week." Health,
food and safety experts confirmed the moth posed no health dangers,
but, as Karl admits, "It was still disgusting."

The 50-employee company hired a PR firm; refunded or credited
all its retailers, wholesalers and distributors; and recalled all
the company's candy products and had them destroyed. Then,
Annabelle shut down its operations for three weeks; dismantled,
sanitized and upgraded its entire facility; and hired a new pest
control company (and settled a lawsuit out of court with the prior
one). The company accompanied everything with a flurry of press
releases describing its revamping efforts.

"We've gotten praise throughout the industry for how
quickly we took responsibility," says Karl, whose company
projects $15 million in sales this year. "It's behind
us."

Someone Stole My Idea!

It's been a year-long course in Patents 101 for Miami
entrepreneur Christopher Descalzo.

The aromatic cedar boxes that have traditionally housed premium
cigars hadn't been improved on in some 150 years. So, in 1996,
Descalzo invented a wooden box with a transparent Plexiglas top to
house his Escudo Cubano and El Sabinar brand cigars. That same year
he applied for a patent on the design.

"The Plexiglas top served a very good purpose," says
Descalzo. "The consumer could see the product and didn't
have to open the box to inspect the condition of the cigars. I
immediately experienced tremendous acceptance from retailers and
consumers alike. We went from zero to $2 million in sales the first
year--90 percent of our success was due to the box."

But there was an unfortunate byproduct: The box spawned a
copycat effect within the industry. Descalzo soon found his
attention-grabbing cigar box design was being used by 18 to 20
other cigar companies. In addition, as new cigar makers flooded the
market and supply overtook demand, Descalzo says, "Smaller
companies such as ourselves [absorbed] a disproportionate amount of
lost sales." After watching his sales drop to $500,000 last
year, Descalzo is trying to stay optimistic: "We're
blessed that we're still in business."

Sure, Descalzo acknowledges there was a contraction in the
overall market, but he can't help but speculate that the loss
of his unique marketing edge was a major contributing factor to his
sales decrease. Notified in September 1998 that his patent had been
approved, "I was elated," says Descalzo. But as his
attorneys told 15 offending cigar markers they had 10 days to cease
and desist, the copycat cigar boxes--all of them--remained on the
market. "The patent is a nice thing to hang on your
wall," Descalzo says, "but you still have to protect your
rights." That protection may only come as the result of an
estimated three to five years of litigation.

But Descalzo isn't giving up. "If you succeed in
validating one case in court," he says, "there's the
likelihood that the others will cease and settle. I may win the war
with just one battle."

My Ex-Husband Opened A Competing Store Across The Street

For 20 years, Patty Zacks had enjoyed connubial and
entrepreneurial bliss alongside her husband. They'd created not
only a family together, but a Providence, Rhode Island, camera
business as well. In 1994, however, when their marital union became
a divorce statistic, Zacks watched helplessly as her ex opened a
competing camera store across the street from Camera Werks.

"I felt crushed," says the 45-year-old mother of two.
Under the divorce agreement, she had only paid a moderate amount of
"goodbye" money to her former husband. But her happiness
at exclusive ownership of the business was short-lived. "I
should have demanded a noncompete clause," she reflects.
"I was extremely naive in dealing with the legal system, [and]
he had a good attorney."

Due to a sagging local economy and competition from her ex,
Camera Werks' sales took a 20 percent dip the following year.
Then an IRS agent showed up at Zacks' door with a bill for
nearly $20,000. Adding insult to injury, she found herself solely
responsible for a business debt she hadn't even known existed.
"It felt like a sword through my heart," she says.
"But you do what you have to do to survive." For Zacks,
that meant refinancing her home to pay off the IRS debt.

She also decided to revamp the store. What started out as more
of a camera repair facility under the former couple's joint
ownership has branched out in some new directions. "I'm
concentrating on education," says Zacks. "We promote and
nurture the art of photography." Annual sales have risen back
to about what they were before the partners' split. "I
didn't want to become a bitter person," says Zacks.
"You have to be willing to grow."